Rally signals confidence in Dreamliner battery fix

Boeing investors are betting that the 787 Dreamliner's grounding is nearing an end, which would allow the plane maker to resume deliveries and reap cash from its marquee jet.

Its shares have rallied 15 percent from a 2013 low on Jan. 29, after regulators ordered 787s parked following a battery fire on one plane and an emergency landing by another. Boeing beat the 3 percent gain for the Standard & Poor's 500 Index and reached the highest since May 2008 last week.

While the Federal Aviation Administration hasn't said when the 787 can return to service, Boeing said testing on the battery fix is more than half complete. Having the jets sidelined stalled Boeing's drive to add revenue by doubling output this year to 10 planes a month from a backlog of more than 800 Dreamliners.

“Boeing has a very long record of being able to work through engineering challenges,” said Peter Jankovskis, chief investment officer of Lisle, Ill.-based Oakbrook Investments LLC, which manages $3.4 billion including Boeing stock. “Once they get through this and begin ramping up 787 production again, that's when the cash flow turns in their favor.”

Deliveries are important because buyers typically make large payments as they take possession of their planes. The Dreamliner's starting list price is $206.8 million, from which customers typically get a discount.

Those handovers were halted after the FAA issued its Jan. 16 grounding directive, joined by regulators worldwide to cover all 49 of the 787s in service. Just a month earlier, Boeing announced a 10 percent dividend increase, the most since 2007, and said it was resuming a $3.6 billion stock-buyback plan.

Boeing extended its advance Wednesday, rising to $84.36 in New York. The stock closed at $86.62 on March 26, the highest since May 19, 2008, and its 12 percent gain in March marked the best monthly performance in three years.